starting to use gnucash

[Mike or Penny Novack]

adekunle adekoya wrote:

>I want to start using gnucash.  Assuming a new company with following
>transactions
>
>  
>1.  Owner introduced cash $500
>
>2.  Bought Van $100
>
>3.  Paid Rent $100
>
>4.  Paid Fuel $20
>
>  
>Questions :
>
>A).         Can you outline the steps to setting up the system in gnucash and
>also posting above transactions ?
>
> 
>B).         Also can you tell me how I can access my financial statements (
>income statement, balance sheet ) after the postings are done ?
>
> 
>Your responses to the above would be appreciated.
>
>  
>
This is a perfect example of the sort of help we can and cannot give (or 
perhaps should and should not)

Question A is really about accounting/bookkeeping in general and the 
answer wouldn't really be different whether using a tool like GnuCash or 
using old fashioned pen and ink on paper. While some of us happen to 
know the answer we are not accredited accountants qualified to advise. I 
am NOT meaning to say you need to hire an accountant since you could 
learn this for yourself. You need a typical "Bookkeeping 101" or 
"Accounting 101" book and could even seek out a title like "Bookkeeping 
for the Unincorporated Small Business".

     There is SOME connection to GnuCash in question A. After you know 
what your account structure (aka "chart of accounts") would look like 
and how these transactions would be entered in the "journal" and then 
posted to the "ledgers" (pen and ink on paper operations and terms) we 
could explain to you how you would do this using autoposting software 
like GnuCash which automates much of the process.

Question B is about GnuCash and the right sort of question to be asking 
us. Assuming that after you have read through the introductory material 
and tried examples you still have questions about getting it to work.

That said ------- (and I don't mean to imply these are all the accounts 
you will need and assuming that all accounts were established manually 
with zero balances*)

1.  Owner introduced cash $500
   A transaction between "cash" (in current assets) and "owner's equity" (equity)

2.  Bought Van $100
   A transaction between "van" (fixed assets) and "cash". No, this is NOT an "expenses". The depreciation of the van over time will be an expense but immediately this is just a transfer between "current assets" and "fixed assets". 

3.  Paid Rent $100
   A transaction between "rent" (expense) and "cash"

4.  Paid Fuel $20
   A transaction between "fuel" (expense) and "cash"

The reports you would run would be "Balance Sheet" and "Income Statement" (aka "profit and loss"). But IMPORTANT. What I have described fits what the accounting rules would be for the jurisdiction in which I reside. I know zero about Nigerian accounting rules.

Michael D Novack, FLMI

* I advise that instead of using the druid. That way you can save a copy of the chart of accounts with all zero balances which could be very useful if you later decide to close and then reopen new books each accounting period.